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The Ultimate Checklist All First-Time Home Buyers Need Now

The Ultimate Checklist All First-Time Home Buyers Need Right Now

We partnered with Rocket Mortgage® to help you navigate the home-buying process during this unique moment in time.

Buying your first home can feel like a daunting process. Try doing it while in the midst of a global pandemic, and you've got a real stress-inducing situation on your hands. But don't panic! Thankfully, there are some great resources out there to help you navigate each stage of your journey and help you be smart about how you're spending your money. First things first: Take a deep breath and get organized. This isn't the time to haphazardly make decisions; be methodical and thoughtful about each step you take toward signing on the dotted line. Keep reading for the essential bullet points you need to check off when looking to buy a home right now.


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Figure Out What You Can Afford

This is probably the most important step in the process — it will guide every other decision you make. Your finances might look a little different now than they usually do, so you'll need to think about both where you are currently and what your future finances could look like. Buying a home is a major commitment, so make sure you're prepared to sign on to a mortgage loan that could last anywhere from 15 to 30 years.

Start by calculating your debt-to-income ratio — this is what mortgage lenders use when calculating how much to loan you. Add up all of your recurring monthly expenses; include things like rent, student loan payments, and minimum credit card payments. What don't you include in this calculation? Expenses that vary from month to month, like utilities or grocery bills. Divide your total monthly debts by your total monthly pre-tax income to find your DTI ratio.

Play around with the Rocket Mortgage® Home Affordability Calculator to get a more detailed view of what you could afford to pay. Keep in mind, home affordability calculators are only meant to give you a ballpark idea of what you can afford. Work with a mortgage lender, like Rocket Mortgage®, to fully understand what you’re approved for based on your financial situation and budget.

Find a Mortgage Lender and Get a Preapproval

Getting preapproved for a mortgage loan is a huge step toward securing the best rate, and ultimately closing on the house of your dreams. There are several benefits to getting a preapproval letter from a mortgage lender. To begin with, you know exactly what you can afford so you can shop within your budget. You're also in a position to make a stronger offer once you do find a home, since a preapproval shows a seller that you in fact have the money needed to purchase the home. Finally, you'll come across fewer last-minute surprises or delays with your lender when you've already been preapproved.

Rocket Mortgage offers a few levels of preapproval. A Rocket Mortgage® Verified Approval verifies your income and assets along with your credit history to provide a more accurate estimate of what you can afford. It also carries more weight with a real estate agent and the seller, because they’ll know you’re verified to afford the home you wish to buy. This level of approval gives you the strength to compete with a cash buyer when you go to make an offer on a home*.

So before you start house-hunting, turn to Rocket Mortgage® to get preapproved — the application is easy and you can even do it online. Plus, once you actually close on your loan, you can manage your mortgage all in one place.


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Start the House Hunt!

Make a list of what you need from your home, your nonnegotiable elements, and those nice-to-have things that aren't make or break. Refer to this list every time you look at a new listing — it should be your guide throughout the process. Then, think about your future self in this home — are you planning to start a family, meaning you'll need an extra bedroom? Do you have a dog who needs a big backyard? Are you going to be working from home for the foreseeable future and need a comfortable office space or nook? Do you want a house that's more turnkey so you don't need to put money into renovations right away? These are all big questions to ask yourself when filtering through potential homes.

Hire a Real Estate Agent

It's not required to hire a real estate agent to help you through the home-buying process, however it's likely going to save you a lot of time and headaches — and potentially even money. Remember that list of needs you made? Agents are there to help you find homes that fit within that list, and keep you on budget. Real estate agents can also facilitate each important step, think: finding a good inspector to suss out issues with the house, testing the plumbing and electrical systems, finding out radon, lead paint, and carbon monoxide inspection results, and other general insider knowledge to ensure you're getting the house and deal you want.

Plus, once you're ready to make an offer, your agent can help you decide how much to offer, draft the letter, help you negotiate with the seller or seller's agent, and sit in on the closing to make sure everything is in order.

If you're having trouble finding a reliable real estate professional in your area, check out the Rocket Homes Real Estate LLC Partner Network, which includes more than 25,000 licensed real estate agents with representatives in all 50 states. Rocket HomesSM is an excellent place to begin your search for the right agent — you won’t find any upfront fees, but you will find a well-connected team of some of the most experienced real estate professionals in the business.


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Make an Offer

Once you've found a property that hits all the marks (yay!), it's time to get down to business and make an offer. Talk to your agent about how much you should submit — they will compare sales data and other local property values to help you come up with a reasonable dollar amount. Don't forget, you can also request things like repairs or that the sale be contingent on a clean inspection. If you're 100 percent set on this home, you could even submit what's called an earnest money deposit to the seller — just keep in mind, you likely won't get it back if for some reason you back out of the sale.

Now, you just have to wait for a response from the seller. Either they accept or reject the offer, or make a counteroffer.

Hire an Inspector and Get an Appraisal

Once you've come to an agreement with the seller, the final step is getting the inspection and appraisal done. An appraisal gives you an estimate of how much your home is worth based on things like overall property values in the area and the general condition of the home. Mortgage lenders require appraisals because they need to know that they aren’t lending you more money than your home is worth. If your appraisal comes in lower than what you offered on the home, you can try and renegotiate the purchase price with the seller, put down a larger down payment to lower the amount of money you’re borrowing, or cancel the sale entirely.

The inspection gets into more nitty-gritty details. A professional inspector will do a walk-through of the property and make sure everything is in working order. They'll test things like the electrical system and plumbing, and look at the condition of the home’s roof, foundation, attic, and/or basement. They'll give you a list of everything they found, which you can use to request repairs from the seller before closing. The seller may agree to give you money towards repairs or fix anything potentially hazardous, but you might be on the hook for other repairs.

Though an inspection usually isn’t a requirement to get a mortgage, you should always get an inspection before closing on a home so there are no big surprises.


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It's Time to Close!

The final piece of the pie is closing on your new property — which comes with some other expenses that you'll need to consider. You'll get what's called a Closing Disclosure that outlines all the terms and costs associated with your mortgage. Remember that in addition to your loan, there will be closing costs like attorney fees, pest inspection fees, appraisal fees, escrow fees, title insurance expenses, or discount points. You should expect to pay around 2 to 5 percent of your total loan amount in closing costs in addition to your downpayment (up to 20 percent of your loan). You also have to pay one year of homeowner's insurance up front.

There's some good news here, too: as a first-time buyer, you could qualify for government-backed grants or loans that assist with closing costs. It's also pretty common to ask the seller to help cover closing costs, which could be a flat percentage of the total closing costs or specific fees, like appraisal or attorney fees.

Last but not least, there will be a final walk-through of the house to make sure any requested changes were made before you sign. Then, once everything is ready to go, your lender will arrange a closing meeting so you can sign all the paperwork. Bring your ID, closing disclosure, and a cashier’s check or proof of a wire transfer for your down payment and closing costs to your closing meeting. A neutral third party called a closing agent will be there to lead the meeting. All that's left to do is sign!

*A Verified Approval is based on an underwriter’s comprehensive analysis of your credit, income, employment status, debt, property, insurance, appraisal and a satisfactory title report/search. Does not apply to loans submitted to Quicken Loans through a mortgage broker. Additional conditions may apply.

Quicken Loans, LLC; NMLS #3030; www.NMLSConsumerAccess.org. Equal Housing Lender. Licensed in 50 states. For additional information please visit RocketMortgage.com

Illustrations by Taylor McManus